Investor confidence slumps to record low; bank seen best again

ASB Bank's survey of investor confidence in the December quarter found net confidence slumped to its worst ever level in one of the most volatile quarters in investing history. The net confidence level, the difference between those positive and negative about the future, plunged to negative 20% from positive 3% in the September quarter. This was the record low level since the survey began in December quarter of 1998 with its previous low of negative 11%. The survey found investors' preferred bank savings accounts and term deposit accounts to rental property for the second quarter running, breaking a trend of property being the favourite investment choice since 2002. In the December quarter 18% of investors preferred term deposits, down from 21% in September quarter, while 16% preferred bank savings accounts, unchanged from September. The proportion who preferred rental property was unchanged at 15%, while the proportion preferring unit trusts and managed funds was unchanged at 10%. Confidence in shares was unchanged at 7%. Confidence in Kiwisaver rose to 6% from 5%. "This consolidation for term and bank deposits in the fourth quarter may have been cemented because of the retail deposit guarantee scheme", said ASB's Head of Investment Services Jonathan Beale. "Investors have had a bumpy ride and may be prepared to forsake higher possible returns in some of the more volatile investments in favour of a good night's sleep and a more modest but reliable return," Beale said. "The attitudes toward shares and managed investments were surprisingly resilient given the turmoil that took place in global share markets over the quarter," he added. "Despite investor confidence being at the lowest it's been in a decade, hitting the panic button should be avoided for long term investors."